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Inequalities in private & public sector: There is something wrong in Greece’s pension system

There is certainly something wrong in the Greek pension system as it divides the people in two social classes: the class of civil servants and the class of private sector workers. There is a lot of talk and scenarios about the future plans of the pensions reform as they are demanded by the creditors. But I won’t talk about the scenarios of cuts in main and supplementary pensions and the hikes in social security contributions or the hazardous effects of the high unemployment to the pension funds reserves. I am going to talk about the inequalities in pensions between pensioners of the public and the private sector.

Giorgos, 85, was stunned to see the last notification of his pension. The man who spent his working life as general medicine practitioner saw in December just 650 euro net in his pension account. His pension has been presented as 1,250 euro gross. But due to several cuts -twice since 2010 – and additional contributions for health and other ‘funds’ that he did not quite understand, Giorgos was left with just 650 euro. He called at his pension fund to find the reason why the money was cut more than 50%. the naswer he received was something like “Don’t waste any thoughts on it, there will be the national pension soon and everything will be settled.”

According to Greece’s creditors’ plans, the so-called National Pension will be 384 euro gross for at least 15 years of work. The pensioner will be able to raise the monthly pension amount according to the years he/she worked and the contributions he/she has paid.

Giorgos, like all current and future pensioners, are unable to calculate what will be the amount of the pension they will receive at the end of the pension reform as negotiations between  creditors and the Greek government are still ongoing.

Giorgos has no clue about the available future pension but he is certain that the 650 euro do not help him and his wife to come through the month. His additional income from two properties he rents has almost broke down due to the economic crisis. He has to lower the leasing price in the last three years, some times the tenants do not pay what they have to or with big delays. He is deseprate. And he is not alone.

Maria, 86, the widow of one of Giorgos’ colleagues who died at the age of 70 some twenty years ago, saw also her widow’s pension sinking down to 620 euro net from 1,130 gross. “How can I live? How can I live?” the woman who suffers from early stage of dementia and other frailties of age screamed at her daughter on New Year’s Day. The daughter is clueless. With her husband hardly managing to keep his shop open and her son still a student, she is not so sure she can bear the additional cost of her mother. Their home is yet too small to have the old lady live with them, the welfare state is absent. When it comes to “welfare benefits and allowances” the income criteria are based on the gross income. Important decisions have to be taken in the very near and pressing future.

In another age category, Olga, managed to finally find out how much pension she will receive: 500 euro gross. Olga who is now 60 years old,was practically forced to go into early retirement  as she was unable to find a job. Already in the beginning of the economic crisis, in 2010, she had to close down her shop with accessories before loading it with debts. she tried for 3 years to get a job. Not a chance for the 50+ woman, who had been working since she finished high school at 18. The pension funds acknowledged for Olga, 25 years of work and found out that some pension ‘stamps’ were missing. For Greeks of older generations, there are always some ‘pension stamps’ missing as employers never paid correctly their contributions. Olga who has not even a home of her own is expecting to get an additional supplementary pension of some 100 euro. She is clueless about her future and is scared to death about what it will bring.

But these examples are just examples from the Greek private sector. Early pensioners from the public sector still enjoy pensions of 1,000 net after 25 years of ‘service’. Just 200-300 euro less than the net salary they used to receive. So is the case of Anna. Banking sector employees are in even better condition with 2,000 euro pension net and 25 years of work. Early retirement conditions after 2010, despite the Memorandum of Understanding and other nice loan agreements.

I heard earlier today on TV that the cap for public sector pension will be down to 2,200-2,300 euro per month from 3,000 currently.

Greeks of private sector are children of a lesser God. As a friend told me “Of course, civil servants have still benefits and despite the austerity cuts, because their unions are still strong and they put pressure on governments threatening to withdraw their votes in elections.”

It seems that nothing, especially the mentality, has changed in Greece after 6 years of austerity cuts.

PS one more point is that private sector employees and self-employed do indeed pay their pension contributions, while there is talk that the public sector contributions are on “spread sheets”.

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  1. All European pension systems (at least, in the major countries) overprivilege public servants with high pensions and low contributions. Greece is just the worst case of a bad general situation. Europe is fucked up, and nobody intends to repair it.

  2. In the UK civil servants lost their ‘privileges’ many years ago and get the same state pension as everyone else these days. Here you must have 35 years of pension contributions to get the full state pension. You can, of course, retire whenever you like – but you cannot get your state pension until you are 65. This is rising to 67 in the next year or two. Also, although the state pension seems to be higher here, the cost of living is higher too. Nobody in the UK can live on the state pension alone, it just isn’t enough, and most people have paid into private pension schemes all their working lives.

    • It is not the case at all that most UK workers have paid into private schemes. The majority in full-time salaried employmenthave occupation pension schemes that their employers have paid into. These are comparable with the German parastate social insurance schemes, which should be (but are not) similar to the Greek schemes. Those in the UK who took their contributions out of the state system (as Thatcher encouraged) and into private schemes have been well and truly fucked, and lost most of their money. Those who have been in part-time and temporary jobs — which is a large proportion of current workers — will end up with almost no pension, as they are not part of occupational schemes.

      The current lot of pensioners in the UK, if they had salaried posts for enough time and paid off their mortgage — have very high pensions relative to their living costs. This is because the main living cost in the UK is property prices or rentals. The next generation will be in poverty, for the most part, and many will not own their own homes. The generation after that (the current youth) will be in dire poverty, unless the economy improves and/or the government creates a better pension system.